♪ >> announcer: this is "nightly business report," with tyler mathisen and sue herera. trio of tech beats. google, microsoft, and amazon all top earnings forecasts, potentially setting a positive tone for tomorrow after a big rally in stocks today. key milestone. mcdonald's says sales are growing in the u.s. for the first time in two years. it's a long-awaited turn around finally here? and retirement savings gap. why sitting on too much cash could shortchange your financial future. all that and more tonight on "nightly business report" for thursday october 22nd. good evening, everyone, and welcome. a recipe for a rally. earnings, economic data, and the prospect of new stimulus measures in europe. all that caused stocks to take off at the open and never look back.

the dow jones industrial average soared 320 points to 17,489. the nasdaq rose 79. and the s&p 500 gained 33. and that optimism could extend into tomorrow after a trifecta of positive tech earnings from microsoft, amazon, and google's parent company, alphabet, were released late today. let's start with alphabet. starts with the letter a, after all. the company reported earnings per share of $7.35, 14 cents better than expectations. revenue also beat estimates and was 13% higher than last year. the company said the number of clicks on ads shown on its website grew more than 20%. it also announced a $5 billion buyback. that sent shares higher in initial after-hours trading. with the new corporate structure, shareholders may be in for some bigger changes when the company releases its next earnings report. and as josh lipton reports, it could bolster the case for the alphabet bulls.

>> reporter: when google co-founder larry page explained why he created alphabet, he said one reason was to build a cleaner, more accountable company. investors have applauded page's decision. the stock has moved higher since the company announced its new corporate structure in august. and analysts think it continues climbing higher from here. that's because when the company next reports earnings in january it will break out the performance of its core business. that means wall street should have a better sense of how search, maps, ads, youtube, and android are performing. financial analysts say investors will be pleasantly surprised. >> investors are excited to see this because there are really two businesses within google. one their core and one these investment areas, or the non-core. those investment areas are operating at losses. they're not making profits. which is artificially suppressing the overall profits investors get to see currently. when they break the two apart, investors will be able to see that the profitability of the

core is actually much higher than what we've seen so far and hence the core is more valuable than investors see right now. >> reporter: when investors see that profitability the argument is that they will bid up the stock in the same way they piled into amazon after the e-commerce giant broke out the growth of its powerful cloud-computing business. it isn't just the increased disclosure that has alphabet's fans excited. they also point to strong revenue growth and a new cfo who is more cost conscious. the risk for alphabet -- when the company 'cause break out its business units in january, investors could see that those non-core business units are in fact even more unprofitable than they estimated. there's also the broader risk of increasing competition for ad dollars by social media giants like facebook. right now, though, 90% of analysts say alphabet is a buy. we could have a better sense of whether they are right when the company next reports.

for "nightly business report" i'm josh lipton in san francisco. and now to microsoft. the tech giant and dow component easily beat wall street expectations today. microsoft earned 67 cents a share in its most recent quarter compared with estimates of just 59 cents. revenue for the quarter came in at $21.7 billion. now, that was down nearly 7% from a year ago. but the target was comparatively modest, about 21 billion. so it was a beat. shares initially popped about 7% after hours. as for amazon, the company posted a surprise profit in its latest earnings report. its second straight quarterly gain. the company citing strong sales in north america and growth in cloud computing. amazon earning 17 cents a share. expectations were for a loss of 13 cents. revenue coming in at last $25.5 billion, also topping estimates. shares initially spiking more than 10% on the news after hours. jon fortt tells us the key

takeaway from both amazon and microsoft's report. >> reporter: good day for seattle. amazon and microsoft both out with earnings that beat analysts' expectations on the top and bottom line. so one thing to look for in amazon's report is the guidance for the important holiday quarter. amazon at the high end guiding above analysts' expectations to $36 billion in revenue. we'll see where they actually come down. and then microsoft. strong quarter from them as well. beat on the pc line. though the expectations were low. the one thing to look at there is the growth in cloud. microsoft saying the cloud annualized run rate revenue was up 70% year over year to $8.2 billion, keeping pace with amazon. for "nightly business report" i'm jon fortt. and the latest results from mcdonald's gave investors hope that the fast food chain is beginning to turn around. the company's u.s. sales rose for the first time in two years, and investors were loving it.

sending shares up 8% to an all-time high. mary thompson has more now on mcdonald's tasty quarter. >> reporter: less than a year on the job mcdonald's ceo steve easterbrook making good on his promise to revive the fast food giant. >> whilst we're still in the early phases our turnaround plan is working. >> reporter: evidence of his plan to include quality, service, and to simplify mcdonald's menu reflected in the company's first increase in global same-store sales in a year and the first increase in u.s. same-store sales in two. easterbrook saying the momentum continues in the current quarter. >> looking ahead, as we begin fourth quarter, global comparable sales are expected to be positive in all segments. >> reporter: behind the stronger global sales a more than 20% increase in china same-store sales. the rebound a year after supplier issues in that country cratered them. in the u.s. its largest market the firm crediting better service and new items like a deluxe chicken sandwich for its higher sales.

mcdonald's profits beat estimates too thanks to a lower tax rate and a lower share count. and while sales improved analyst matt defrisco sees other hurdles to clear. >> labor ace big issue. january 1st, 2016 you have over 20 states that are going to turn the minimum wage up higher. certainly you have other restaurants looking for the best talent. wage pressure's going to go up. benefits are going to go up. you need to offset that. >> reporter: this putting added pressure on mcdonald's to keep sales growing in order to offset those higher costs. an expected driver of sales, all-day breakfast introduced at the beginning of this quarter. >> i would say the enthusiasm that was from customers and from our teams in the restaurants are high. it's been a successful rollout. >> reporter: as a global firm mcdonald's sees currency headwinds taking 8 to 10 cents off its bottom line in the current quarter. still the winds of change seem to be bringing a breath of fresh air to what had become a tired and troubled brand.

for "nightly business report" i'm mary thompson. >> so is this the start of the long-awaited turnaround in mcdonald's that sharltds have been waiting for? dick bartlett with suntrust robinson humphrey has a buy rating on the stock with a price target of 125. welcome. it's great to have you here, jake. and i guess with a price target like that and a buy rating you do think this is the beginning of the turnaround. >> yes, i do. they've really set the stage here in the u.s. by improving the service and core menu items like the quarter pounder. we also have toasted buns. we have a new chicken sandwich that has been a tremendous success. they've really done a lot of work behind the scenes over the last year that is producing what we're seeing today. >> is the customer experience getting better? that has been a real gripe. >> yes. i think the customer experience is getting better. there's been some question about whether all-day breakfast could interrupt service a little bit. but in general they've taken items off the menu. that speeds up service. it speeds up the quality of what

you're getting. so it really has improved. they're put a lot of work into it. >> they introduced the all-day breakfast which you just mentioned. in their press release they did cite the fact they thought it drove foot traffic. even though it hasn't been in place for very long, how much of a boost do you expect that to give their business as it goes into full swing? >> right. so the breakfast launched in the beginning of october, which is the beginning of the fourth quarter. so we haven't seen that in numbers yet. they're guiding for positive same-store sales in the u.s. in the fourth quarter. they didn't quantify what that would be. my estimate is 2%. those who put a number on it, i think the breakfast adds about 1% to 2%. it really makes about flat traffic. this is all moving in the right direction. we did have negative traffic in the third quarter. so there's a lot more work to be done. i think the next step is really a national value platform. that's a 2016 story really. but that is the next step to its turnaround and what could really give it some legs. >> you know, i don't want to get wonky here, but you're

predicting that e earnings per share are going to go up from what you had previously said. i wonder how much of that is real profit or how much of it is driven by stock buybacks. and they've been aggressive with it. >> you know, their margins -- because of their sales were better than expected, they did get more leverage. we had higher profits in every segment of their income statements. so each region is contributing to higher than expected profit. it's really been broad-based in the third quarter today, was a real broad-based recovery. we're talking about the u.s. now, but every region was actually better than we expected. >> all right, jake, we'll leave it there. thanks so much for joining us. jake bartlett with suntrust robinson humphrey. >> and the fellow dow component caterpillar slashed its outlook today. the company said weak demand for equipment used in mining and oil drilling will eat into earnings for the full year. caterpillar also reaffirming its forecast for a decrease in sales in 2016 for the fourth consecutive year. >> our big markets are mining

our oil business. supplies to that market are very soft right now. we announced a major restructuring a month ago to address this, to get out in front of it for 2016. we're doing all we can to fortify this company to get through this very rough patch we're seeing today. >> the stock, however, did rise because the results were pretty much in line with expectations and not worse. 3m is cutting its full-year profit forecast and says it will shed about 1,500 jobs worldwide. the maker of scotch tape and post-it notes reported a sales drop of 5% in its latest quarter. hurt by a strong dollar and a slowing global economy. wall street liked the idea, though, of the cost cuts, and it sent shares higher by 4%. and still ahead, a new report today shows the housing market is still hot. so why are some realtors worried? ♪

♪ ♪ the number of americans filing for new unemployment claims rose slightly less than expected last week, remaining near levels not seen since late in 1973. claims rose by 3,000 to a seasonally adjusted 259,000. most economists were expecting 265,000. now, 300,000 is the level usually tied to a strengthening labor market. anything below that is good.

and it is the 33rd straight week we have been below that mark. >> and there's more signs of strength in the housing market. sales of existing homes in september hit their second highest monthly pace since early 2007. the national association of realtors says sales rose nearly 5% to an annual rate of more than 5.5 million units. but as diana olick reports, realtors are starting to get worried. >> reporter: september sales rounded out a strong spring and summer season for the housing market. the numbers are well above a year ago and price gains are still strong. the trouble is the bulk of the action is on the high end. the median home price hit $221,900 in september, but sales were strongest for homes priced above that median. above 250k sales gained 22% from last year. but sales of homes priced below 100k, they fell. that's because there's so little supply on the low end.

>> because land prices have remained elevated in this recovery, builders are having a harder time building a lower-cost home. it's harder for them to do that because they can't reach the profitability levels that they need to realize in their numbers. >> reporter: overall the number of listings actually fell in september. it usually rises in the fall due to slower sales. the lack of cheaper homes is at least partially to blame for the drop in first-time buyers. they're nowhere near normal levels and even fell from a month ago. typically, this is the time of year singles or young couples without kids make that first home purchase. >> first-time home buyer has trouble getting mortgage credit. they require a higher down payment, and it's more difficult for a first-time entry buyer to get in today than it has been -- it has been in three or four years because a lot of the new rules and regulations make it difficult for that buyer to qualify. >> reporter: realtors claim credit is easing a little bit and that could help, but if supply doesn't turn higher

through the colder months things will get tighter and tougher come spring. for "nightly business report" i'm diana olick in washington. mortgage rates fell slightly this past week. according to freddie mac the average rate on a 30-year mortgage ticked down to 3.79%. the 30-year has now been below 4% for three months. to europe now, where comments from european central bank president mario draghi helped drive stocks higher. he signaled the bank could extend its stimulus program beyond 2016 in an effort to increase growth and tackle weak inflation. >> if we were to see that the technical assumptions underlying these projections have worsened or the down side resell freezing them are materializing we may well change the size, the composition, the design of all our monetary policy instruments as needed. >> the ecb's next meeting on monetary policy is in december.

united airlines raises its profit margin forecast, and that is where we begin tonight's market focus. the airline topped analyst expectations helped by lower fuel costs. the company's acting ceo promised better service for travelers as he tried to reassure shareholders that united was in good hands. this following the heart attack of ceo oscar munoz and the recent resignation of former ceo jeff smisek. shares of the company up close to 3% today. they finished at 56.05. sticking with the airlines, southwest also benefiting from lower fuel costs. the airline reported higher revenue and record third quarter profit that beat expectations. ceo gary kelly said traffic demand is also improving. >> the capacity that the airline industry offers is increasing to meet that demand. we're growing our capacity over 7% this year and will be growing 5% to 6% next year. >> shares jumped over 7% today to 44.08.

dow chemical also citing lower fuel costs as a driver for growth this quarter. the company saw its plastics business improve, mainly in europe. it is also reviewing options for its pesticide and seed segments and raising its dividend. shares of the company up more than 5% to 49.92. under armour reported higher profits and a jump in quarterly revenue as the company expands its presence in footwear. its core apparel business also grew helping under armour post its first ever billion-dollar quarter for sale. but some investors are concerned about weakening margins. that pressured the stock, and it was down more than 5% at 93.81. at&t releasing its earnings after the bell today, beating analyst expectations. this report is the first after the company completed its acquisition of directv in july. the company saw subscriber growth in both its wireless group and its newly acquired satellite television business. shares closing a percent higher for the day to 33.96 and seeing

a jump in afterhours action as well. investors getting a chance today to react to community health systems' earnings warning issued late yesterday. the health care services provider saw a decrease in hospital admissions as well as higher payroll costs associated with hiring more physicians. shares of the company getting crushed today, down over 35% to 26.30. shares of gnc holdings feeling the heat after the oregon attorney general filed suit against that company. that suit alleges that the nutritional supplement retailer knowingly sold products spiked with synthetic drugs. gnc says the claims are without merit. shares of the company falling 14% to 34.50. and shares of valeant pharmaceuticals continue to come under pressure. the company said it plans to host a conference call to address all the recent allegations against the company. as we reported yesterday, a short seller accused valeant of fraudulent business practices. shares down more than 7% today to 109.87.

the golden years could be rocky for many people nearing retirement. new findings in a study show that there's a very large gap between the amount people need in retirement and how much they've actually saved. the study was conducted by blackrock, which surveyed more than 4,000 people. sharon epperson is here with more on the findings. sharon, what is the actual savings gap that blackrock found? >> well, it might be pretty surprising to you. what's good is that people have an idea of how much money they need. baby boomers say they need about $45,000 a year in retirement. but what they've actually saved would allot them only about $9,000 a year. >> that's a big hole. >> so that $149,000 they have in their nest egg is only going to amount to $9,000 a year. it's a $36,000 annual savings gap. that's a big gap. >> it is. and it's a huge shortfall. but is there a reason why that shortfall is there other than people perhaps not saving enough? >> well, not saving enough of course is a problem but also where you save is important.

where you put that money. and a lot of people are just putting it in cash. they're saying we're not comfortable with this market, we're just going to keep it in cash, instead of knowing they should put a third of their money they think in cash. they're putting 65% of their holdings in cash. so because they're not well diversified that's one of the reasons why they're having the shortfall. >> and does that income gap include the money that i might collect from a pension or social security or is that just the amount that my savings are -- >> this is looking at your portfolio. this is looking at your portfolio. the issue is that people aren't saving enough and aren't being long-term savers. the majority of folks were not putting their money into longer-term investments. the majority of folks were not working with a financial adviser to figure out how the social security part and the investments that you're making on your own will work together and how much you really need to stay. >> what do you do, then? obviously working with a financial adviser as scary as that may be, a lot of it is fear. >> a lot of it is fear and realizing that yes, you have a

age you'd like to retire but if you are able to retire at 65, 66, and some people maybe even 70, you are also likely to live longer. there are a lot of drugs out there that keep you healthy and keep you in the game for a lot longer than you may expect. we're talking about 10, 20, 30 years in retirement. so you're going to need a lot of money and you're going to need your money to grow. so the idea of putting that money in cash, putting that money in fixed income, that old -- >> it pays zero. cash pays zero. >> it really does not work. and you need to be more aggressive. it's fear about doing that. it seems very, very risky. but it's the reality. >> we have to wrap here. but you've often pointed out that people above 50 can take advantage of some sort of late start or catch-ups to 401(k)s. >> 401(k)s, for i.r.a.s. extra 6,000 for your 401(k) and extra $1,000 for your i.r.a. put that money in, put as much money in as you can. >> fantastic. sharon epperson, appreciate it. and as we continue, coming up, game on. one company's big move to be a leader in the fast-growing and competitive gaming industry.

♪ ♪ ♪ john malone's liberty global is reportedly in talks to acquire cable and wireless communications. the "wall street journal" reports that deal could be worth more than $5 billion. cable and wireless, which trades in london, has more than 6

million subscribers, and it offers pay television, internet, land line, and wireless services in the caribbean, panama, and monaco. united auto workers union has approved a new labor pact with fiat chrysler. 77% of workers ratified the four-year deal, and the agreement will now be used as a blueprint for contracts with the other automakers. the union says it will next target general motors. activision making a big push into competitive video gaming. otherwise known as e-sports. the company behind the call of duty franchise is creating an entire division devoted solely to this fast-growing business. and as julia boorstin reports, it has a lot at stake. >> let's take a look at -- >> reporter: as the land grab for e-sports continues, video game giant activision blizzard is stake a claim. announcing a new division devoted to e-sports. and two big hires to run it. former ceo of espn and the nfl network steve borenstein will be the division's chairman, and

mike sepso, formerly president of major league gaming, will be its svp. >> when you look at e-sports, it's a $600 million revenue opportunity globally. u.s. market's very small, a little over $100 million. most of it's corporate sponsorship. you bring someone like steve borenstein in to think of other ways to monetize the business. >> reporter: this follows activision's announcement last month that it's creating a worlding lea for its hit call of duty. with $3 million in prize money. activision's blizcon event will feature the global finals for games including starcraft 2 and world of warcraft. gamers competing for more than 4 million hds in prizes. this is just the latest bet that more consumers will want to watch people play video games. the number of e-sports fans is expected to grow from 116 million this year to 165 million in 2018, according to a report from new zoo.

and traditional media is moving further into e sports. last month turner and img partnered to create a new sports league and to air the competitions on tbs. >> i think it's a low-cost risk for someone like turner to put on some live event programming that's going to draw in a youthful audience. that's going to be very favorable for advertisers. it's not going to cost a lot to do. and they'll see what works. video games is a growing business. it's got a broad user base and this console cycle is off to a very good start. so i think there's a lot of reasons to be hopeful. >> up until now youtube and twitch which amazon bought for a billion dollars, have been the main destinations for watching video game play. now we'll see if video game giant activision and the companies that draw millions of users to traditional sports can cash in on e-sports as well. for "nightly business report" i'm julia boorstin in los angeles. >> and let's take another look. let's just linger on today's rally on wall street, shall we? the dow rose 320 points, nearly

2%. the nasdaq gained 79, about 1 2/3%. and the s&p 500 added 33. i think mcdonald's surprised a lot of people. >> i think it did. and you know, good for them if that turnaround so long in coming is finally here. we'll see what the breakfast -- all-day breakfast menu adds to it. >> and mario draghi helped too in europe. >> oh, in europe, yeah. easy rates for a long time to come. that's "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> thanks from me as well. i'm tyler mathisen. have a great evening, everybody. we will see you back here tomorrow night. ♪ rip

[sofaya] and talking to really cool people [ben] who have really connected their passion with their career. [martha] we're closing in on a week left in the trip pretty much. [olivia] you know so when you get to the end of the whole processes and you're like well there's door one door two, i want to create door number three and walk through that one. [ben] new york! [leader #1] you know if you believe something is right and you go and convince the people around you, you know i believe in this and wonderful things happen. [female narrator #1] road trip nation is made sponsored by... autodesk: providing software and resources for tomorrow's designers and engineers to solve today's challenges hobsons, providing solutions to educational institutions that help students move successfully through each stage of the learning life cycle. [female narrator #2] road trip nation would like to thank college board for supporting this series.